BILL NUMBER: SB 1732	CHAPTERED  09/30/00

	CHAPTER   1069
	FILED WITH SECRETARY OF STATE   SEPTEMBER 30, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 30, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 29, 2000
	AMENDED IN ASSEMBLY   AUGUST 28, 2000
	AMENDED IN ASSEMBLY   AUGUST 10, 2000
	AMENDED IN ASSEMBLY   JUNE 22, 2000
	AMENDED IN SENATE   MAY 10, 2000
	AMENDED IN SENATE   APRIL 24, 2000

INTRODUCED BY   Senator Burton

                        FEBRUARY 23, 2000

   An act to amend Section 511.1 of the Business and Professions
Code, to amend Section 1395.6 of the Health and Safety Code, to amend
Section 10178.3 of the Insurance Code, and to amend Sections 4603.2
and 4609 of the Labor Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1732, Burton.  Health care providers:  preferred rates.
   Existing law, operative on and after July 1, 2000, with respect to
contracts providing for the payment of preferred reimbursement rates
by payors for health care services rendered by health care
providers, imposes certain disclosure and related requirements on
contracting agents, as defined, who sell, lease, assign, transfer, or
convey a list of contracting providers and their contracted
preferred reimbursement rates to other payors or contracting agents,
and also imposes certain requirements on payors who seek to pay a
preferred reimbursement rate, as specified.
   This bill would recast and revise these provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 511.1 of the Business and Professions Code is
amended to read:
   511.1.  (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in a payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed to the provider in advance and that the
payor shall actively encourage beneficiaries to use the network,
unless the health care provider agrees to provide discounts without
that active encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision (d),
or another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.

   (2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate.  For purposes of this paragraph, a
payor is deemed to have actively encouraged its beneficiaries to use
the list of contracted providers if one of the following occurs:
   (A) The payor's contract with subscribers or insureds offers
beneficiaries direct financial incentives to use the list of
contracted providers when obtaining medical care.  "Financial
incentives" means reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a provider panel, or
financial penalties directly attributable to the nonuse of a provider
panel.
   (B) The payor provides information directly to its beneficiaries,
who are parties to the contract, or, in the case of workers'
compensation insurance, the employer, advising them of the existence
of the list of contracted providers through the use of a variety of
advertising or marketing approaches that supply the names, addresses,
and telephone numbers of contracted providers to beneficiaries in
advance of their selection of a health care provider, which
approaches may include, but are not limited to, the use of provider
directories, or the use of toll-free telephone numbers or internet
web site addresses supplied directly to every beneficiary.  However,
internet web site addresses alone shall not be deemed to satisfy the
requirements of this subparagraph.  Nothing in this subparagraph
shall prevent contracting agents or payors from providing only
listings of providers located within a reasonable geographic range of
a beneficiary.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care.  Nothing in this subdivision
shall be construed to require a payor to actively encourage the payor'
s beneficiaries to use the list of contracted providers when
obtaining medical care in the case of an emergency.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
   (5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the payors'
beneficiaries to use the list of contracted providers when obtaining
medical care as described in paragraph (2).  Each provider's election
under this paragraph shall be binding on the contracting agent with
which the provider has the contract and on any other contracting
agent that buys, leases, or otherwise obtains the list of contracted
providers.  A provider shall not be excluded from any list of
contracted providers that is sold, leased, transferred, or conveyed
to payors that actively encourage the payors' beneficiaries to use
the list of contracted providers when obtaining medical care, based
upon the provider's refusal to be included on any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that do not actively encourage the payors' beneficiaries to use the
list of contracted providers when obtaining medical care.
   (6) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in subparagraph
(A) of paragraph (3) of subdivision (d).
   (c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision (d), shall do all of the
following:
   (1) Provide an explanation of benefits or explanation of review
that identifies the name of the plan or network that has a written
agreement signed by the provider whereby the payor is entitled,
directly or indirectly, to pay a preferred rate for the services
rendered.
   (2) Demonstrate that it is entitled to pay a contracted rate
within 30 business days of receipt of a written request from a
provider who has received a claim payment from the payor.  The
failure of a payor to make the demonstration within 30 business days
shall render the payor responsible for the amount that the payor
would have been required to pay pursuant to the contract between the
payor and the beneficiary, which amount shall be due and payable
within 10 business days of receipt of written notice from the
provider, and shall bar the payor from taking any future discounts
from that provider without the provider's express written consent
until the payor can demonstrate to the provider that it is entitled
to pay a contracted rate as provided in this paragraph.  A payor
shall be deemed to have demonstrated that it is entitled to pay a
contracted rate if it complies with either of the following:
   (A) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (B) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to paragraph (5) of subdivision (b).
   (d) For the purposes of this section, the following terms have the
following meanings:
   (1) "Beneficiary" means:
   (A) For workers' compensation insurance, an employee seeking
health care services for a work-related injury.
   (B) For automobile insurance, those persons covered under the
medical payments portion of the insurance contract.
   (C) For group or individual health services covered through a
health care service plan contract, including a specialized health
care service plan contract, or a policy of disability insurance that
covers hospital, medical, or surgical benefits, a subscriber, an
enrollee, a policyholder, or an insured.
   (2) "Contracting agent" means a third-party administrator or trust
not licensed under the Health and Safety Code, the Insurance Code,
or the Labor Code, a self-insured employer, a preferred provider
organization, or an independent practice association, while engaged,
for monetary or other consideration, in the act of selling, leasing,
transferring, assigning, or conveying, a provider or provider panel
to provide health care services to beneficiaries.  For purposes of
this section, a contracting agent shall not include a health care
service plan, including a specialized health care service plan, an
insurer licensed under the Insurance Code to provide disability
insurance that covers hospital, medical, or surgical benefits,
automobile insurance, or workers' compensation insurance, or a
self-insured employer.
   (3) (A) For purposes of subdivision (b), "payor" means a health
care service plan, including a specialized health care service plan,
an insurer licensed under the Insurance Code to provide disability
insurance that covers hospital, medical, or surgical benefits,
automobile insurance, workers' compensation insurance, or a
self-insured employer that is responsible to pay for health care
services provided to beneficiaries.
   (B) For purposes of subdivision (c), "payor" means only those
entities that provide coverage for hospital, medical, or surgical
benefits that are not regulated under the Health and Safety Code, the
Insurance Code, or the Labor Code.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to this division.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
   (E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
   (e) This section shall become operative on July 1, 2000.
  SEC. 2.  Section 1395.6 of the Health and Safety Code is amended to
read:
   1395.6.  (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in a payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed to the provider in advance and that the
payor shall actively encourage beneficiaries to use the network,
unless the health care provider agrees to provide discounts without
that active encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision (d),
or another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose to the provider whether the list of contracted
providers may be sold, leased, transferred, or conveyed to other
payors or other contracting agents, and specify whether those payors
or contracting agents include workers' compensation insurers or
automobile insurers.
   (2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate.  For purposes of this paragraph, a
payor is deemed to have actively encouraged its beneficiaries to use
the list of contracted providers if one of the following occurs:
   (A) The payor's contract with subscribers or insureds offers
beneficiaries direct financial incentives to use the list of
contracted providers when obtaining medical care.  "Financial
incentives" means reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a provider panel, or
financial penalties directly attributable to the nonuse of a provider
panel.
   (B) The payor provides information to its beneficiaries, who are
parties to the contract, or, in the case of workers' compensation
insurance, the employer, advising them of the existence of the list
of contracted providers through the use of a variety of advertising
or marketing approaches that supply the names, addresses, and
telephone numbers of contracted providers to beneficiaries in advance
of their selection of a health care provider, which approaches may
include, but are not limited to, the use of provider directories, or
the use of toll-free telephone numbers or Internet web site addresses
supplied directly to every beneficiary.  However, internet web site
addresses alone shall not be deemed to satisfy the requirements of
this subparagraph.  Nothing in this subparagraph shall prevent
contracting agents or payors from providing only listings of
providers located within a reasonable geographic range of a
beneficiary.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care.  Nothing in this subdivision
shall be construed to require a payor to actively encourage the payor'
s beneficiaries to use the list of contracted providers when
obtaining medical care in the case of an emergency.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreement with any contracting agent.
   (5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the payors'
beneficiaries to use the list of contracted providers when obtaining
medical care as described in paragraph (2).  Each provider's election
under this paragraph shall be binding on the contracting agent with
which the provider has the contract and any contracting agent that
buys, leases, or otherwise obtains the list of contracted providers.
A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care, based upon the
provider's refusal to be included on any list of contracted providers
that is sold, leased, transferred, or conveyed to payors that do not
actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care.
   (6) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in subparagraph
(A) of paragraph (3) of subdivision (d).
   (c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision (d), shall do all of the
following:
   (1) Provide an explanation of benefits or explanation of review
that identifies the name of the network that has a written agreement
signed by the provider whereby the payor is entitled, directly or
indirectly, to pay a preferred rate for the services rendered.
   (2) Demonstrate that it is entitled to pay a contracted rate
within 30 business days of receipt of a written request from a
provider who has received a claim payment from the payor.  The
failure of a payor to make the demonstration within 30 business days
shall render the payor responsible for the amount that the payor
would have been required to pay pursuant to the applicable health
care service plan contract, including a specialized health care
service plan contract, covering the beneficiary, which amount shall
be due and payable within 10 business days of receipt of written
notice from the provider, and shall bar the payor from taking any
future discounts from that provider without the provider's express
written consent until the payor can demonstrate to the provider that
it is entitled to pay a contracted rate as provided in this
paragraph.  A payor shall be deemed to have demonstrated that it is
entitled to pay a contracted rate if it complies with either of the
following:
   (A) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (B) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to paragraph (5) of subdivision (b).
   (d) For the purposes of this section, the following terms have the
following meanings:
   (1) "Beneficiary" means:
   (A) For workers' compensation insurance, an employee seeking
health care services for a work-related injury.
   (B) For automobile insurance, those persons covered under the
medical payments portion of the insurance contract.
   (C) For group or individual health services covered through a
health care service plan contract, including a specialized health
care service plan contract, or a policy of disability insurance that
covers hospital, medical, or surgical benefits, a subscriber, an
enrollee, a policyholder, or an insured.
   (2) "Contracting agent" means a health care service plan,
including a specialized health care service plan, while engaged, for
monetary or other consideration, in the act of selling, leasing,
transferring, assigning, or conveying, a provider or provider panel
to payors to provide health care services to beneficiaries.
   (3) (A) For the purposes of subdivision (b), "payor" means a
health care service plan, including a specialized health care service
plan, an insurer licensed under the Insurance Code to provide
disability insurance that covers hospital, medical, or surgical
benefits, automobile insurance, workers' compensation insurance, or a
self-insured employer that is responsible to pay for health care
services provided to beneficiaries.
   (B) For the purposes of subdivision (c), "payor" means only a
health care service plan, including a specialized health care service
plan that has purchased, leased, or otherwise obtained the use of a
provider or provider panel to provide health care services to
beneficiaries pursuant to a contract that authorizes payment at
discounted rates.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200).
   (E) Any entity exempt from licensure pursuant to Section 1206.
   (e) This section shall become operative on July 1, 2000.
  SEC. 3.  Section 10178.3 of the Insurance Code is amended to read:

   10178.3.  (a) In order to prevent the improper selling, leasing,
or transferring of a health care provider's contract, it is the
intent of the Legislature that every arrangement that results in a
payor paying a health care provider a reduced rate for health care
services based on the health care provider's participation in a
network or panel shall be disclosed to the provider in advance and
that the payor shall actively encourage beneficiaries to use the
network, unless the health care provider agrees to provide discounts
without that active encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision (d),
or another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.

   (2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate.  For purposes of this paragraph, a
payor is deemed to have actively encouraged its beneficiaries to use
the list of contracted providers if one of the following occurs:
   (A) The payor's contract with subscribers or insureds offers
beneficiaries direct financial incentives to use the list of
contracted providers when obtaining medical care.  "Financial
incentives" means reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a provider panel, or
financial penalties directly attributable to the nonuse of a provider
panel.
   (B) The payor provides information to its beneficiaries, who are
parties to the contract, or, in the case of workers' compensation
insurance, the employer, advising them of the existence of the list
of contracted providers through the use of a variety of advertising
or marketing approaches that supply the names, addresses, and
telephone numbers of contracted providers to beneficiaries in advance
of their selection of a health care provider, which approaches may
include, but are not limited to, the use of provider directories, or
the use of toll-free telephone numbers or internet web site addresses
supplied directly to every beneficiary.  However, internet web site
addresses alone shall not be deemed to satisfy the requirements of
this subparagraph.  Nothing in this subparagraph shall prevent
contracting agents or payors from providing only listings of
providers located within a reasonable geographic range of a
beneficiary.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care.  Nothing in this subdivision
shall be construed to require a payor to actively encourage the payor'
s beneficiaries to use the list of contracted providers when
obtaining medical care in the case of an emergency.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
   (5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the payors'
beneficiaries to use the list of contracted providers when obtaining
medical care as described in paragraph (2).  Each provider's election
under this paragraph shall be binding on the contracting agent with
which the provider has a contract and any other contracting agent
that buys, leases, or otherwise obtains the list of contracted
providers.  A provider shall not be excluded from any list of
contracted providers that is sold, leased, transferred, or conveyed
to payors that actively encourage the payors' beneficiaries to use
the list of contracted providers when obtaining medical care, based
upon the provider's refusal to be included on any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that do not actively encourage the payors' beneficiaries to use the
list of contracted providers when obtaining medical care.
   (6) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in subparagraph
(A) of paragraph (3) of subdivision (d).
   (c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision (d), shall do all of the
following:
   (1) Provide an explanation of benefits or explanation of review
that identifies the name of the network that has a written agreement
signed by the provider whereby the payor is entitled, directly or
indirectly, to pay a preferred rate for the services rendered.
   (2) Demonstrate that it is entitled to pay a contracted rate
within 30 business days of receipt of a written request from a
provider who has received a claim payment from the payor.  The
failure of a payor to make the demonstration within 30 business days
shall render the payor responsible for the amount that the payor
would have been required to pay pursuant to the beneficiary's policy
with the payor, which amount shall be due and payable within 10
business days of receipt of written notice from the provider, and
shall bar the payor from taking any future discounts from that
provider without the provider's express written consent until the
payor can demonstrate to the provider that it is entitled to pay a
contracted rate as provided in this subdivision.  A payor shall be
deemed to have demonstrated that it is entitled to pay a contracted
rate if it complies with either of the following:
   (A) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (B) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted                                            providers
pursuant to paragraph (5) of subdivision (b).
   (d) For the purposes of this section, the following terms have the
following meanings:
   (1) "Beneficiary" means:
   (A) For automobile insurance, those persons covered under the
medical payments portion of the insurance contract.
   (B) For group or individual health services covered through a
health care service plan contract, including a specialized health
care service plan contract, or a policy of disability insurance that
covers hospital, medical, or surgical benefits, a subscriber, an
enrollee, a policyholder, or an insured.
   (C) For workers' compensation insurance, an employee seeking
health care services for a work-related injury.
   (2) "Contracting agent" means an insurer licensed under this code
to provide disability insurance that covers hospital, medical, or
surgical benefits, automobile insurance, or workers' compensation
insurance, while engaged, for monetary or other consideration, in the
act of selling, leasing, transferring, assigning, or conveying a
provider or provider panel to provide health care services to
beneficiaries.
   (3) (A) For the purposes of subdivision (b), "payor" means a
health care service plan, including a specialized health care service
plan, an insurer licensed under this code to provide disability
insurance that covers hospital, medical, or surgical benefits,
automobile insurance, or workers' compensation insurance, or a
self-insured employer that is responsible to pay for health care
services provided to beneficiaries.
   (B) For the purposes of subdivision (c), "payor" means only an
insurer licensed under this code to provide disability insurance that
covers hospital, medical, or surgical benefits, automobile
insurance, if that insurer is responsible to pay for health care
services provided to beneficiaries.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
   (E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
   (e) This section shall become operative on July 1, 2000.
  SEC. 4.  Section 4603.2 of the Labor Code is amended to read:
   4603.2.  (a) Upon selecting a physician pursuant to Section 4600,
the employee or physician shall forthwith notify the employer of the
name and address of the physician.  The physician shall submit a
report to the employer within five working days from the date of the
initial examination and shall submit periodic reports at intervals
that may be prescribed by rules and regulations adopted by the
administrative director.
   (b) Payment for medical treatment provided or authorized by the
treating physician selected by the employee or designated by the
employer shall be made by the employer within 60 days after receipt
of each separate, itemized billing, together with any required
reports.  If the billing or a portion thereof is contested, denied,
or considered incomplete, the physician shall be notified, in
writing, that the billing is contested, denied, or considered
incomplete, within 30 working days after receipt of the billing by
the employer.  A notice that a billing is incomplete shall state all
additional information required to make a decision.  Any properly
documented amount not paid within the 60-day period shall be
increased by 10 percent, together with interest at the same rate as
judgments in civil actions retroactive to the date of receipt of the
bill, unless the employer does both of the following:
   (1) Pays the uncontested amount within the 60-day period.
   (2) Advises, in the manner prescribed by the administrative
director, the physician, or another provider of the items being
contested, the reasons for contesting these items, and the remedies
available to the physician or the other provider if he or she
disagrees.  In the case of a bill which includes charges from a
hospital, outpatient surgery center, or independent diagnostic
facility, advice that a request has been made for an audit of the
bill shall satisfy the requirements of this paragraph.
   If an employer contests all or part of a billing, any amount
determined payable by the appeals board shall carry interest from the
date the amount was due until it is paid.
   An employer's liability to a physician or another provider under
this section for delayed payments shall not affect its liability to
an employee under Section 5814 or any other provision of this
division.
   (c) Any interest or increase in compensation paid by an insurer
pursuant to this section shall be treated in the same manner as an
increase in compensation under subdivision (d) of Section 4650 for
the purposes of any classification of risks and premium rates, and
any system of merit rating approved or issued pursuant to Article 2
(commencing with Section 11730) of Chapter 3 of Part 3 of Division 2
of the Insurance Code.
  SEC. 5.  Section 4609 of the Labor Code is amended to read:
   4609.  (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in any payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed by the contracting agent to the provider in
advance and shall actively encourage employees to use the network,
unless the health care provider agrees to provide discounts without
that active encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision (e),
or another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.

   (2) Disclose what specific practices, if any, payors utilize to
actively encourage employees to use the list of contracted providers
when obtaining medical care that entitles a payor to claim a
contracted rate.  For purposes of this paragraph, a payor is deemed
to have actively encouraged employees to use the list of contracted
providers if the employer provides information directly to employees
during the period the employer has medical control advising them of
the existence of the list of contracted providers through the use of
a variety of advertising or marketing approaches that supply the
names, addresses, and telephone numbers of contracted providers to
employees; or in advance of a workplace injury, or upon notice of an
injury or claim by an employee, the approaches may include, but are
not limited to, the use of provider directories, the use of a list of
all contracted providers in an area geographically accessible to the
posting site, the use of wall cards that direct employees to a
readily accessible listing of those providers at the same location as
the wall cards, the use of wall cards that direct employees to a
toll-free telephone number or internet web site address, or the use
of toll-free telephone numbers or internet web site addresses
supplied directly during the period the employer has medical control.
  However, internet web site addresses alone shall not be deemed to
satisfy the requirements of this paragraph.  Nothing in this
paragraph shall prevent contracting agents or payors from providing
only listings of providers located within a reasonable geographic
range of an employee.  A payor who otherwise meets the requirements
of this paragraph is deemed to have met the requirements of this
paragraph regardless of the employer's ability to control medical
treatment pursuant to Sections 4600 and 4600.3.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the employees to use the list of contracted providers
when obtaining medical care.  Nothing in this subdivision shall be
construed to require a payor to actively encourage the employees to
use the list of contracted providers when obtaining medical care in
the case of an emergency.
   (4) Disclose, upon the initial signing of a contract, and within
15 business days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
   (5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the employees to
use the list of contracted providers when obtaining medical care as
described in paragraph (2).  Each provider's election under this
paragraph shall be binding on the contracting agent with which the
provider has the contract and any other contracting agent that buys,
leases, or otherwise obtains the list of contracted providers.
   A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the employees to use the list of contracted
providers when obtaining medical care, based upon the provider's
refusal to be included on any list of contracted providers that is
sold, leased, transferred, or conveyed to payors that do not actively
encourage the employees to use the list of contracted providers when
obtaining medical care.
   (6) If the payor's explanation of benefits or explanation of
review does not identify the name of the network that has a written
agreement signed by the provider whereby the payor is entitled,
directly or indirectly, to pay a preferred rate for the services
rendered, the contracting agent shall do the following:
   (A) Maintain a web site that is accessible to all contracted
providers and updated at least quarterly and maintain a toll-free
telephone number accessible to all contracted providers whereby
providers may access payor summary information.
   (B) Disclose through the use of an Internet web site, a toll-free
telephone number, or through a delivery or mail service to its
contracted providers, within 30 days, any sale, lease assignment,
transfer or conveyance of the contracted reimbursement rates to
another contracting agent or payor.
   (7) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in subparagraph
(A) of paragraph (3) of subdivision (e).
   (c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision (e), shall do all of the
following:
   (1) Provide an explanation of benefits or explanation of review
that identifies the name of the network with which the payor has an
agreement that entitles them to pay a preferred rate for the services
rendered.
   (2) Demonstrate that it is entitled to pay a contracted rate
within 30 business days of receipt of a written request from a
provider who has received a claim payment from the payor. The
provider shall include in the request a statement explaining why the
payment is not at the correct contracted rate for the services
provided.  The failure of the provider to include a statement shall
relieve the payor from the responsibility of demonstrating that it is
entitled to pay the disputed contracted rate.  The failure of a
payor to make the demonstration to a properly documented request of
the provider within 30 business days shall render the payor
responsible for the lesser of the provider's actual fee or, as
applicable, any fee schedule pursuant to division, which amount shall
be due and payable within 10 days of receipt of written notice from
the provider, and shall bar the payor from taking any future
discounts from that provider without the provider's express written
consent until the payor can demonstrate to the provider that it is
entitled to pay a contracted rate as provided in this subdivision.  A
payor shall be deemed to have demonstrated that it is entitled to
pay a contracted rate if it complies with either of the following:
   (A) Describes the specific practices the payor utilizes to comply
with paragraph (2) of subdivision (b), and demonstrates compliance
with paragraph (1).
   (B) Identifies the contracting agent with whom the payor has a
written agreement whereby the payor is not required to actively
encourage employees to use the list of contracted providers pursuant
to paragraph (5) of subdivision (b).
   (e) For the purposes of this section, the following terms have the
following meanings:
   (1) "Contracting agent" means an insurer licensed under the
Insurance Code to provide workers' compensation insurance, a health
care service plan, including a specialized health care service plan,
a preferred provider organization, or a self-insured employer, while
engaged, for monetary or other consideration, in the act of selling,
leasing, transferring, assigning, or conveying a provider or provider
panel to provide health care services to employees for work-related
injuries.
   (2) "Employee" means a person entitled to seek health care
services for a work-related injury.
   (3) (A) For the purposes of subdivisions (b) and (c), "payor"
means a health care service plan, including a specialized health care
service plan, an insurer licensed under the Insurance Code to
provide disability insurance that covers hospital, medical, or
surgical benefits, automobile insurance, or workers' compensation
insurance, or a self-insured employer that is responsible to pay for
health care services provided to beneficiaries.
   (B) For the purposes of subdivision (d), "payor" means an insurer
licensed under the Insurance Code to provide workers' compensation
insurance, a self-insured employer, a third party administrator or
trust, or any other third part that is responsible to pay health care
services provided to employees for work-related injuries, or an
agent of an entity included in this definition.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
   (E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
   (f) This section shall become operative on July 1, 2000.
  SEC. 6.  The amendments made by this act to Section 511.1 of the
Business and Professions Code, Section 1395.6 of the health and
Safety Code, Section 10178.3 of the Insurance Code, and Sections
4603.2 and 4609 of the Labor Code do not apply retroactively, and
shall become operative on January 1, 2001.
